OPINION, P8 MONEY & MARKETS, P10 EDITORIAL Deepening bond markets will help lower yields INTERNATIONAL, P14 MAHESH VYAS KEKI MISTRY REAPPOINTED MD DATA SCANDAL CMIE data showed jobs grew by 1.4mn in 2017, not 15mn as claimed by Surjit Bhalla HDFC sees 39% jump in Q4 profit, 18% growth in loan book Report says Twitter also sold data to Cambridge Analytica NEW DELHI, TUESDAY, MAY 1, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 51, 20 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,160.36 ▲ 190.66 NIFTY: 10,739.35 ▲ 47.05 NIKKEI 225: 22,467.87 ▲ 148.30 HANG SENG: 30,808.45 ▲ 527.78 `/$: 66.66 ▲ 0.09 `/€: 80.54 ▲ 0.77 BRENT: $74.03 ▼ $0.61 GOLD: `31,029 ▼ `161 7.5 6.93 6.57 6.38 6.5 5.98 6.0 THE GOVERNMENT IS not considering cutting excise duty on petrol and diesel yet as rates have not touched levels that could trigger such an action, said economic affairs secretary Subhash Chandra Garg, reports PTI. State oil firms have not revised petrol and diesel price for almost a week now. This after petrol price hit a 55-month high of `74.63 a litre and diesel rates climbed to a record high of `65.93. Garg said oil prices can impact the government's fiscal maths if they result in a spike in rates of LPG — the only commodity that is subsidised now. FY14 FY15 FY17 FY13 FY14 FY15 FY16 FY17 53,000 48,000 Annual staff reduction^ 11,31,000 11,85,000 Number of employees FY16 54,000 FY13 1,06,000 FY12 12,91,000 No excise duty cut on petrol, diesel for now: DEA secy 5.0 Annual wage cost/employee has shot up 50% between FY13 and FY17 13,49,000 STAGNANT REVENUE, COUPLED with the limited success in paring redundant staff, has worsened central public sector enterprises’ (CPSEs) salary burden in recentyears,official data show. The CPSEs’ wagecost-to-sales ratio rose from a low of 5.9% in FY15, the year the Narendra Modi government assumed office,to 7.2% in FY17. The ratio might have worsened further in FY18, the year that saw pay hikes for about 4 lakh CPSE officers — the total CPSE staff is 11.3 lakh at present — on the lines of the Seventh Pay Commission award, entailing an extra expenditure of around `8,000 crore. The salarybill (total emoluments) of these firms rose from `1.22 lakh crore in FY14 to `1.4 lakh crore in FY17. CPSE staff strength declined from over 14 lakh in FY13 to 13.5 lakh in FY14 and further to 11.3 lakh in FY17. However, their wage-cost-tosales ratio has started rising again since FY14 owing to the stagnation in revenue and rising salaries. Total net income (revenue) 5.5 14,02,000 PRASANTA SAHU New Delhi, April 30 5.92 58,000 7.0 7.18 FY13 FY14 FY15 FY16 FY17 ^Includes VRS; employee reduction largely due to superannuation and use of automation, contractual labour of CPSEs — there were 257 operating units in FY17 — had peaked at `20.56 lakh crore in FY14; however, there was a rather steep declining trend since then, to `17.64 lakh crore in FY16. CPSE revenue improved to `18.22 lakh crore in FY17. While the Modi government got these state-owned enterprises to up their investments in recent years — to a degree,CPSE capex curbed the declining trend in overall investment rate in the economy — these firms’ profitability has been on the decline. CPSEs’ aggregate net profits decline from `1.28 lakh crore in FY14 to `1.03 lakh crore in FY15,andimprovedthereafter to `1.28 lakh crore in FY17. Total numberof employees in CPSEs has been declining steadily since FY07 (except during FY12). However, per capita staff cost has been on the rise. The per capita staff cost has gone up by 50% from `8.3 lakh per annum in FY13 to `12.4 lakh in FY17. Sources said across-theboard wage hikes for non-officer staff are likely to be implemented through FY19. Continued on Page 2 THE COMMITTEE OF creditors (CoC) for Bhushan Power and Steel are in the process of deciding whether to go for a second round of bidding or not. Sources said that after thevoting process initiated by the resolution professional (RP) concludes on Tuesday, a final decision in this regard will emerge. The race for the bankrupt company had taken a turn on April 23 when the National CompanyLawTribunal (NCLT) asked its lenders led by Punjab National Bank to consider the late bid submitted by UKbased Liberty House. Liberty House had,on February26,challenged the rejection of its bid by the RP on the grounds it had been submitted late. The two bidders who had submitted their bids within the deadline of February 8 were Tata Steel and JSW Steel. So far these two steelmakers have not challenged the order. Bhushan Power and Steel owed lenders close to `47,000 crore as on March 31,2017. Continued on Page 2 SURBHI PRASAD New Delhi, April 30 LAKSHADWEEP, THE JOINT venture between the Sudhir Valia-led Suraksha Asset Reconstruction Companyand Mumbai-based Dosti Realty, has offered to bring in `3,510 crore upfront for the 25,000apartment residential project of the Jaypee Group on Noida Expressway. In addition, `4,000 crore due to the banks is be got from the sale of land parcels of the Jaypee Group. Sudhir Valia is the brotherin-lawofDilipShanghviofSun Pharmaceutical Industries. As perthe company’s offer, while `750 crore will be brought in through a cash infusion, another `2,760 will be got from the Yes Bank — Lakshadweep will give a bank guarantee till the time a final sanction letter is obtained from the bank. Yes Bank will maintain an escrow account in which all INFRA PROJECTS Know how to build a diversified MF portfolio The major benefit of diversifying across asset classes is that if one asset class performs poorly, the other asset class can provide cushion to absorb that loss ■ Personal Finance, P13 The making of an artificially intelligent offline store AI can help offline retailers catch up with agile and data-driven online players through accurate insights about store performance. Globally, several brands are incorporating AI-based solutions in offline retail ONE-TIME SPECTRUM FEE Idea-Voda may have to pay up for merger OK RISHI RANJAN KALA New Delhi, April 30 that OTSC need to be cleared in case of any M&A and if the matter is under dispute in WITH THE DEPARTMENT of courts,then a bank guarantee telecommunications (DoT) for the same amount needs to planning to challenge the be furnished. Telecom Disputes Settlement Based on this, the DoT had and Appellate Triraised a demand bunal (TDSAT) for a bank guaranorder asking it to tee of `1,500 crore clear the merger of from Bharti,which Telenor India’s had acquired the operations with operations of Bharti Airtel withTelenor India last One-time out insisting for a year in February. bank guarantee of spectrum charge Since Telenor has due from Idea `1,500 crore operations in only towards one-time seven circles, spectrum charges the DoT had (OTSC) for holding demanded the OTSC due from spectrum beyond amount due from Vodafone 4.4 MHz, it has Bharti from only almost become these seven circles. certain that Idea Bharti had got the and Vodafone will approval from also have to pay OTSC before other regulatory bodies for their merger is cleared by the the merger but the DoT government. refused to grant permission Sources in the DoT unless the bank guarantee said that the merger and was furnished. acquisition policy framed in February 2014 clearly states Continued on Page 2 `2,113 cr `3,599 cr QuickPicks Sensex soars to 3-month high MARKETS CONTINUED their winning run for a third straight session, with the Sensex rising 191 points to a near three-month high of 35,160, led by intense buying mainly in banking and IT stocks amid positive global cues and high optimism on corporate earnings, reports PTI. Also, the broader Nifty gained over 47 points to breach the psychological 10,700-level. PAGE 11 IndInfravit Trust to list `3,200 cr INDINFRAVITTRUST will launch a `3,200-crore private placement of new units on Thursday, IFR reported, citing a deal term sheet, reports Reuters. A total of 323 million units — 279 million primary and 44 million secondary — will be sold at a fixed price of `100 each, or an annual implied rate of return of 12%, IFR, a Thomson Reuters publication, said. PAGE 6 PFRDA for equity exposure hike INDIA’S EQUITY has surged in recent years, and is about to get a new endorsement — from the nation’s pension regulator, reports Bloomberg. The PFRDA is pressing the Centre to increase the equity proportion for government employees to 50%, from 15% — to match the maximum for private-sector pensions overseen by its National Pension System arm. PAGE 11 ■ Infuse `3,510 cr towards completion of under construction housing projects ❑ `750 cr by way of upfront equity infusion ❑ `2,760 cr by upfront credit limit by Yes Bank ■ Bring requisite funds in case of any shortfall in projects completion ■ No payment of fine to home-buyers, no charging them for delays ■ May monetise land worth `4,000 cr to pay the banks collections from home buyers will be deposited. The Lakshadweep Group has said that if there’s any shortfall to complete the project it would bring in additional funds to deliver the homes to the buyers as per the resolution plan. The company has clearly mentioned that it does not plan to earmark any funds for payment to the home buyers and does not plan to charge any interest on delayed payments to them. It plans to achieve comple- BANIKINKAR PATTANAYAK Cost over-runs up, delayed projects number down Central-sector infra projects saw a 13.6% rise in cost over-runs by end-January from 10.9% at the end of March 2017, although the number of delayed projects dropped. This suggests a larger number of high-value projects faced cost over-runs in FY18 Key delayed projects TIME IS UP (Central-sector infra projects*) Special Features THE OFFER 60 54.9 50 Delayed projects (%) 40 19.8 30 20 10 0 17.2 Cost over-run (%) Mar ‘13 13.6 Mar ‘17 Jan ‘18 *1,304 such projects as of Jan 2018, each cost at least `150 crore Anticipated costs (` crore) Udhampur-SrinagarBaramulla rail link Network for Spectrum Subansiri Lower project (NHPC) RishikeshKarnaprayag rail line Barh STPP (NTPC) Cost over-run (%) 1,018 27,946 24,664 85 19,191 205 16,216 278 15,096 74 Source MoSPI ● STRATEGIC BUYER PFC seeks buyers for project by KSK Energy subsidiary KSK Energy Ventures (` cr) FY17 FY18 (9 months) Net revenue Interest cost Net loss Source: Capitaline EXIT MODE DSP could disappear from AMC joint venture with BlackRock FE BUREAU Mumbai, April 30 DSPBLACKROCKASSETManagement Company (AMC) may soon lose the DSP tag,with the street abuzz with talk of BlackRock,the NewYork-based asset manager that’s the world’s largest,planning to buy out the 60%stakeofDSPintheirIndian joint venture. BlackRock currentlyhas a 40% stake. It seems that while there is some agreement on the structureofthedeal,talksaroundvaluationmaytakealittlelongerto be ironed out.Typically,AMCs are valued at a percentage of tion of the under-construction projects in three to five years and deploy at least 20,000 workers at the site on daily basis. It also plans to develop additional floor area ratio to be granted to it by relevant authorities on the vacant land. On October 27, 2017, the resolution professional had invited companies, including real estate firms, with a net worth of over `1,000 crore to complete the delayed projects of Jaypee Infratech,including Noida’s Wish Town project,by infusing `2,000 crore or more. Among the 18 companies that had shown interest in buying Jaypee Infratech, three — Lakshadweep, the Adani Group and the KotakCube consortium —were later shortlisted. Lakshadweep’s offer is seen as better than that of Adani Group’s `5,500-crore bid.Although the consortium comprising Kotak Realty and Cube Highways has offered around `8,000 crore, it wants to separate the highway operations from the real estate project,something that the lenders are not comfortable with. Jaypee Infratech has outstanding loans of about `8,500 crore. 636 SURYA SARATHI RAY New Delhi, April 30 CPSEs' wage cost to sales ratio (%) In addition, `4,000 cr to come from monetising land parcels of the Jaypee Group 281 Wage-cost-to-sales ratio up from 5.9% in FY15 to 7.2% in FY17, pay panel’s hikes in FY18 may have worsened it THE SUICIDE ATTACK that killed nine Afghan journalists as they gathered to cover a bomb explosion in the capital Kabul on Monday was the deadliest day for the country's media since a US-led campaign ousted the Taliban in 2001, reports Reuters. Police had blocked off the site of the first blast and photographers, cameramen and reporters were standing around in a loose group when the bomber struck, killing seven journalists outright and wounding several, two of whom later died. The bomber appeared to have deliberately targeted journalists. In all, 26 people died in the two blasts, which were claimed by the Islamic State. Valia to infuse `3,510 cr for Jaypee Infra projects 2,195 1,474 Staff down but CPSE salary burden rising Final call on second round of bids on Tuesday REVIVAL PLAN 3,939 ● BHUSHAN POWER 2,619 WAGES AND THE WORKFORCE IN THE NEWS Twin suicide attack deadliest day for Afghan journalists LETTING GO ■ DSP may sell 60% stake to BlackRock for up to `3,600 cr ■ DSP-BlackRock AMC ranks 9th on AUM ■ Veteran banker, Hemendra Kothari, may exit financial world theirassetsundermanagement (AUM). With DSP BlackRock’s average AUM at `86,236 crore for the January-March 2018 quarter,thiswould implya deal SHAYAN GHOSH Mumbai, April 30 value of about `3,100-3,600 crore,if a 6-7% value ofAUM is factored in forthe deal. While several deals in the past—likeL&TFinanceacquiring Fidelity AMC and Nippon Life buying in Reliance AMC — weredoneatabout6%ofAUM, with the strong brand credentials of DSP BlackRock, its industry standing (ranking ninth among over 40 AMCs on AUM) and the strong growth in the mutual fund business (AUM for Q4FY18 grew 26% for the industry),a highervaluation cannot be ruled out. LEDBYPOWERFinanceCorporation (PFC), lenders to KSK Mahanadi Power — a thermal power project of KSK Energy Ventures in Chhattisgarh with debt of `18,551 crore — are seekingabuyerfortheproject,a documentinvitingbidsshowed. “SBI Capital Markets Limited has been mandated by PowerFinanceCorporation(on behalf of the consortium of lenders of the company) to identify a strategic investor to effectchangeinownershipand management control of a 3,600 MW (6x600 MW) coal based thermal power project using sub-critical technology in the state of Chhattisgarh,” the document said. Continued on Page 2 Continued on Page 2 E AND V BAND SPECTRUM Telecom players expect ‘light touch’ regulation from commission FE BUREAU New Delhi, April 30 AHEADOFTHEcrucialTelecom Commission meeting on May1 where a decision is expected whethertoauctionorde-licence spectrum in the E and V bands, which are used as backhaul to connect mobile where fibre is not available, most experts FE spoketosaidthatde-licensingis thewayforwardandholdingan auction does not make sense. Sources in the department of telecommunications (DoT) alsosaidthatanauctionisruled out and even administrative assignment,which means first come, first served, is ruled out. What’s likelyon the cards is delicensing, which also means light licensing. In fact,the Telecom Regulatory Authority of India (Trai), which submitted its recommendations to DoTway back in August 2014,has also favoured a light licensing approach and not auctioning this spectrum. Broadband India Forum president TV Ramachandran WAVE THEORY What are E & V Bands? ■ They are used as backhaul to connect mobile where fibre is not available ■ Have low propagation characteristic ■ Used for broadband services, not for direct mobile connectivity Why should they not be auctioned? ■ Because of low propagation characteristic have low value ■ They are provided for very short link ■ Managing assignment is a herculean task What's the best way forward? ■ De-licence them ■ Have light touch regulation by charging token amount ■ Trai has also suggested against auctioning said,“Government should look atde-licensingtheVband,while Ebandshouldhavelightlicensing.”Headdedthatconventional microwave cannot handle large data demand and,even though fibre is an excellent choice in terms of capacity,it is not feasible or cost-effective for many short backhaul distances,especially due to right of way issues involved.Inurbanandsuburban orin dense areas,it’s difficult to bridge the last-mile gap between the fibre access point and the end-userbuilding. MaheshUppal,telecomanalysts and director of ComFirst India, agrees with Ramachandran’sviews.Hesaid,“De-licensing V band ensures that no single entityhas an exclusive right over it.It is different from both first come, first served method aswellastheauctionroute.FCFS andauctionbothresultincreatinganexclusiveright.De-licensing encourages optimal utilisation without additional cost of acquiring spectrum.” Continued on Page 2
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